Paul L. Caron

Thursday, March 7, 2013

Deductibility of 'Making It Rain' Payments

RainTMZ:  Jim Jones, The Game, Bizzy Bones: Deducting Making-It-Rain $$$ is Legit!!!:

Rapper Jim Jones is figuring out how to deal with Uncle Sam next month, and he's considering deducting expenses on his income tax for making it rain. Well guess what, in theory he might have a fighting chance of winning.

Jones is not alone. Bizzy Bone tells TMZ, "I'm giving charity to females who need their light bills paid. So, of course, that's a write-off. You write off your kids, don't you?"

The Game tells TMZ ... making it rain "is good for business and promotion that comes with the lifestyle of a rapper. They bump our music in a strip club, so me giving the girls a little bit of change to shake their ass -- that comes with the business. Everybody wins."

There are 2 possible ways a rapper could justify deducting strip club tips as a business expense:

1.  ENTERTAINMENT EXPENSES. These costs could be deducted if the rapper is entertaining a client, customer or employee and the expense is not "lavish or extravagant." So it might be hard for Drake to justify dropping 50K in a club, but another rapper who lets a grand fly would have a much better argument.

2.  ADVERTISING OR PUBLICITY. These expenses could be deducted if they are "reasonable ... and are directly related to [the rapper's] business." Funny thing ... a lot of rappers say making it rain is something they have to do to build their image so people will buy their records, so as crazy as it sounds, they may have a leg to stand on.

(Hat Tip: Greg Holger.)

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